by K.T. Weaver, SkyVision Solutions, Updated October 2, 2018

The recent court ruling allowing smart meter privacy invasions was based on a false premise of “benefits.”

Smart meters do not reduce costs, do not result in cheaper power, do not encourage energy efficiency, and do not increase grid stability.

Smart meters do not provide a net public benefit and do not promote the public interest.

Since smart meters do not provide a net public benefit or promote the public interest, the Court ruling was in error, and smart meters do therefore represent an “illegal search.”

Rationale on Whether Smart Meters Offer “Benefits” or Not

As a follow-up to my previous articles [1] [2] pertaining to the recent final judgment in the court case of Naperville Smart Meter Awareness (NSMA) v. City of Naperville, I wanted to more fully explain that the Court’s ruling was based upon a false premise. That false premise was that utility smart meters offer significant “benefits” to the government, the utility, and consumers.

This article can also be considered as further examining the line of thought mentioned in a separate article that the Appeals Court effectively “deemed” that legitimate government interests exist for granular data collection, at least to the extent of 15-minute increments. These “legitimate government interests” pertain to “deemed benefits” as articulated by utility industry dogma.

Although I have no legal means to overturn the final judgment of the Court, it can be readily shown that the Court’s premise of “benefits” is ostensibly false. It logically follows that the Court’s conclusion that smart meter privacy invasions (warrantless searches) are “reasonable” is also ostensibly false and in error.

On August 16, 2018, U.S. Court of Appeals for the Seventh Circuit ruled that:

“[Smart meter] data, even when collected at fifteen-minute intervals, reveals details about the home that would be otherwise unavailable to government officials [without] a physical search. Naperville therefore ‘searches’ its residents’ homes when it collects this data.”[3]

Just to be clear, in the above words, the Court has concluded that under the provisions of the Fourth Amendment to the U. S. Constitution, smart meter data collection represents a warrantless search.

But rather than concluding that Naperville residents were being subjected to an illegal search, it instead accepted utility industry dogma that smart meters offer significant benefits. As stated by the Court:

“With these benefits stacked together, the government’s interest in smart meters is significant. … We hold that these interests render the city’s search reasonable, where the search is unrelated to law enforcement, is minimally invasive, and presents little risk of corollary criminal consequences.”[3]

Therefore, based upon the premise of “significant” smart meter “benefits,” the Court concluded that the City of Naperville’s warrantless search of its residents every 15 minutes was “reasonable,” further stating:

With the Appeal Court’s shocking final judgment, NSMA and its members were given no opportunity to argue against the premise of smart meter “benefits” since that issue had not been previously relevant in the ongoing court proceedings since 2011. The issue at hand was whether consumer rights were being violated.

Retrospectively, what could NSMA have presented given the chance as evidence on the issue of benefits? Let’s look at the “benefits” mentioned by the Court: reducing costs, providing cheaper power to consumers, encouraging energy efficiency, and increasing grid stability.

Do smart meters reduce costs?

Substantial convincing evidence has recently surfaced that smart meter deployment projects are not cost-effective. In a rate hearing in the state of Kentucky, the testimony presented on behalf of the Office of the Attorney General states:

“The Companies admitted in discovery they were aware of no independent analyses that indicate the benefits of an actual smart meter deployment exceeded its costs. Conversely, in all three of the only unbiased, comprehensive evaluations of smart grid benefits and costs post-deployment ever conducted, customer costs exceeded customer benefits.”[4]

Now that the initial hype surrounding waves of smart meter deployments is past, and where costs were subsidized by 50% by the American Reinvestment and Recovery Act of 2009, regulators are finally reviewing large smart meter investments with increasing levels of skepticism. Three (3) major smart meter projects have been denied in 2018:

In Massachusetts, the Department of Public Utilities in proceedings for Massachusetts Electric (National Grid) and Eversource (NStar) concluded:

“We determined that the benefits of a full deployment of advanced metering functionality do not currently justify the costs.” [5]

In New Mexico, the Pubic Regulation Commission in proceedings for Public Service Company of New Mexico (PNM) concluded:

“The net savings over the lifetime of the project that PNM relies upon to support the reasonableness of the AMI project are uncertain. … PNM’s cost-benefit analysis also fails to include likely costs, and, based upon these uncertainties and omissions, the project’s lifetime costs appear likely to exceed its savings. … The plan presented in the Application does not provide a net public benefit and it does not promote the public interest.”[6] [7]

In Kentucky, the Public Service Commission in proceedings for Louisville Gas and Electric Company & Kentucky Utilities Company concluded:

“[T]the Companies failed to provide sufficient evidence to persuade us that the AMS proposal satisfies the requirements of KRS 278.020(1) by demonstrating that the current meters are obsolete or that the benefits of the AMS proposal outweigh the costs here.”[8]

In addition, based upon my latest review that smart meter useful lifetimes of not more than 10 years should be assigned in cost benefit analyses, it difficult to envision any scenario where smart meter benefits could exceed costs. [9]

“The Companies similarly failed to present sufficient evidence to demonstrate that the AMS proposal would not result in wasteful duplication. As mentioned above, the remaining service lives of LG&E’s and KU’s electric meters are 17.4 years and 15.4 years, respectively. This accounts for $16.7 million and $36.2 million in undepreciated book value for LG&E and KU, respectively. Moreover, the Companies have offered no evidence into the record that indicates their current metering systems are failing to provide adequate service. Rather, the evidence indicates that the Companies are able to provide adequate service with their existing meters.”[8]

Looking back to 2015, it is also important to recall what I have previously written for the state of New Hampshire, where Eversource Energy has stated:

“Eversource does not believe smart meters and/or AMI are key enabling investments for the future of the modernized grid. As demonstrated by Eversource’s plan in Massachusetts, there are many more cost effective technologies that can help meet the grid modernization objectives that Eversource considers to be key in any modernization program.”

“Key Operational Benefits from an AMI Deployment are Insufficient. Eversource’s analysis also indicates that the incremental operational benefits of moving to an AMI platform are insufficient to warrant the increased cost.”

“In addition to the legal and logistical issues related to the deployment of Advanced Metering Infrastructure (‘AMI’) in New Hampshire, Eversource believes that a broad-based deployment, or a multi-stage roll-out, of smart meters or AMI is not cost-effective for New Hampshire customers. In its recently submitted grid modernization plan in Massachusetts, Eversource conducted a careful analysis of the costs and benefits of a broad deployment of AMI and found such deployment to be highly cost ineffective.” [10]

Based upon the above, I conclude that smart meters do not reduce costs and are not cost-effective.

Do smart meters allow utilities to provide cheaper power to consumers?

The short answer is “No!” Just looking at the City of Naperville where the Court case was decided against NSMA, the City has raised electric rates 6%, 7%, 8.3%, 3.6%, and 3.6% for the years 2014, 2015, 2016, 2017, and 2018, respectively. [11] [12] Smart meter installations for the City were effectively completed by the end of 2013.

In addition, the whole point for utility rate proceedings is to pass smart meter deployment costs on to consumers with a rate increase. In many instances as indicated above for Kentucky, perfectly good legacy meters are essentially trashed before the end of their useful lifetimes, and the new smart meters likely have shorter useful lifetimes than if the older meters were simply left in place. Thus, it is difficult to envision how smart meters would ever result in “cheaper power.” They do not.

Do smart meters encourage energy efficiency?

The hypothetical argument here is that consumers will retrieve granular energy usage readings from online portals or In-Home Devices (IHDs) to help manage their own electrical usage and thereby conserve energy.

I have previously dispelled these theories that are based on biased studies that attempt to justify the technology. My latest analysis showed that under the most optimistic circumstances, consumers within the general population might reduce their energy consumption by only as much as 0.5 to 0.7 % if they have access to enhanced feedback from smart meters. [13]

Generally in the United States and Canada, consumers with smart meters have access to their granular data through a web portal (on a delayed basis) so they can see when they use the most energy. There is little evidence that consumers are interested in having access to this data. As previously reported at this website, less than 1% of the millions of smart meter customers in Texas have ever logged in to view their usage data [14].

Confirmatory information was offered by the testimony presented on behalf of the Office of the Attorney General for the state of Kentucky:

“In discovery, the Companies report that 7,817 customers were participating in the AMS Customer Offering [pilot ePortal] as of March 31, 2018. With approximately 796,171 residential electric customers in Kentucky between the Companies, the AMS Customer Offering participation rate is almost exactly 1% (0.9818%). This participation rate was secured after almost 2.5 years of heavy promotion, which was described by the Companies through discovery as ‘email, online advertising, search engine marketing, social media, and direct mail items like bill envelopes, bill inserts, and customer newsletters’.”[4]

As stated in the Order for the Kentucky proceedings:

“Moreover, the Companies operate a limited opt-in AMS pilot program that has yet to reach full capacity, and many of the pilot program customers do not regularly check usage data, which is 24 to 48 hours old. The lack of robust utilization of the usage data in the pilot program reflects on customers’ desire for the type of data that would be offered by AMS.”

“Thus, based on the evidentiary record, the Commission is not convinced that customers will benefit substantially from the usage data as proposed by the Companies or that the failure to provide that data to all customers would result in inadequate service.”[8]

In the City of Naperville where the Court case was decided against NSMA, the utility department to this day has never developed an online portal for consumers to access their energy readings. Perhaps the City realized that such a program would be a waste of money despite the Court counting such a program as part of the rationale for ruling against consumers and their privacy rights.

Smart meters by themselves do not “encourage” energy efficiency. (Also note I have previously written about how smart meters offer no net benefits to consumers; refer to References [15] through [20].)

Do smart meters increase grid stability?

Again, the short answer is “No!” Here the Court is misplaced in attempting to assert that smart meters somehow increase electric grid stability. Smart meters simply measure energy usage by remote means and replace human meter reading personnel who would periodically inspect utility meters for safety issues. Smart meters offer added functionality to collect privacy invading granular data and in fact introduce cyber threats into the system that could have catastrophic consequences such as widespread blackouts or worse.

“What is almost always assumed or alluded to by meter advocates, but never explained, is how reading meters, however frequently, can serve the goals or functions of the smart grid — i.e., balancing supply and demand. Never explained is how granular personal meter data helps manage the grid. It is believed by some that consumer electricity usage behavior data may be useful to utilities or to consumers. But it is not clear how such data would actually be applied, nor is it clear that there are not cheaper and more benign ways to acquire it. SCADA [21] networks already provide utilities with the aggregate transformer or substation load data needed to assess distribution loads and conditions. A premises meter is not needed, or would be impractically cumbersome to use, to aggregate data to derive distribution grid load information.” [22]

To assert or speculate that you are somehow going to manage grid stability through smart meters gets into the area of, quite simply, “wasteful duplication.”

Hypothetically, the modernization of the electric grid itself and the creation of a “smart grid” could help increase grid stability, but that has little or nothing to do with smart meters on customer homes.

Conclusions

Smart meters do not reduce costs, do not result in cheaper power, do not encourage energy efficiency, and do not increase grid stability.

Consistent with the ruling in the New Mexico rate proceedings, it can be concluded that smart meters do not provide a net public benefit and do not promote the public interest.

The U.S. Court of Appeals for the Seventh Circuit recently ruled that smart meter warrantless searches were reasonable and therefore legal by accepting utility industry dogma on the “benefits” of smart meters. This dogma was shown above to be false. NSMA was given no opportunity to demonstrate that the Court’s final judgment was based upon a false premise.

The Court had also mentioned the word “significant” in its rationale on government interests and benefits. Even if one could acknowledge some limited benefits to smart meters, this article has certainly shown that they are not significant and are largely outweighed by the costs. Limited or marginal benefits, if any, could not be considered to outweigh one’s Constitutional rights.

It is sad and disappointing that the Court accepted the dogma (false premise) that smart meters somehow further legitimate “government interests” in any significant way. Plus, even if they did, 15-minute granular usage data would not be needed to support those interests. [23]

Thus, notwithstanding the Court’s ruling, it has been shown that since the ruling was based upon a false premise of significant smart meter “benefits”, the ruling was in error, and smart meter usage data is in fact being collected every 15 minutes without a required warrant and in violation of the Fourth Amendment to the U.S. Constitution. Smart meter data collections in Naperville, Illinois, represent an unreasonable and therefore illegal search.

[8] Public Service Commission for the Commonwealth of Kentucky, Case No. 2018-00005, Order pertaining to Deployment of Advanced Metering Systems for Louisville Gas and Electric Company & Kentucky Utilities Company, August 30, 2018; available at https://wp.me/a3nav9-4aO

[21] SCADA (System Control and Data Acquisition) is an array of communication protocols that have been employed by the utility industry for decades, primarily for substation monitoring and distribution automation purposes.

[23] This article focused on the false premise of smart meter benefits. Another false premise is that personal 15-minute granular energy usage data is needed in order to successfully deploy smart meters assuming you could elsewhere establish circumstances where smart meter deployments promote a net positive public benefit. Many utilities in fact collect 1-hour data when they deploy smart meters (which is less invasive than collecting 15-minute data). A few utilities collect 5-minute data. There is currently no magical number (based upon a privacy impact assessment) on what might be considered a proper balance between consumer privacy interests and so-called legitimate government interests in collecting granular energy usage data. Since this issue was not addressed by the Naperville court case or any other court case, there is no objective basis to merely accept 15-minute granular data collection as reasonable.

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